Healthcare is on the cusp of innovative technologies and disruptive business models that will change the industry.
There’s little doubt that new innovations will disrupt healthcare operations and the revenue cycle as well as care delivery.
The bigger question is whether those will be technological in nature, new business models or a combination of both? While hospitals and health insurers await that answer, many executives and experts are closely watching two partnerships unfold: CVS Health’s proposed merger with Aetna and Amazon’s pact with JPMorgan and Berkshire Hathaway.
Here’s a look back at how these partnerships got to where they are today:
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It all started with a failed merger
Aetna agreed to acquire Humana in July of 2015 in a $34 billion deal that ultimately fizzled because a federal court ruling blocked the merger. Even still, it signaled big changes ahead. Those came just before the end of 2017 when CVS Health revealed plans to buy Aetna. And the question of whether it would spark innovative business models or the $69 billion price tag was just not worth it arose immediately. Some analysts wondered why CVS Health would pay so much.
Amazon enters the fray
Amazon, Berkshire Hathaway and JPMorgan Chase announced in January 2018 that they are forming a not-for-profit healthcare company – and the giants did so without saying much more. The healthcare industry held its breath waiting to see what would happen when three very large employers with cutting-edge technology melded, especially because one of them is Amazon, and early reactions suggested everyone should start moving to keep pace with whatever disruption might come of the deal. They’re still waiting.
Who will take the helm?
Speculation swirls about a short list of potential CEOs for the new company, including former Centers for Medicare and Medicaid Services Acting Administrator Andy Slavitt and former Cleveland Clinic CEO Toby Cosgrove.
Atul Gawande named CEO
Finally, the trio announced a CEO, Atul Gawande, MD, a distinguished Brigham and Women’s Hospital surgeon best known to the general public for his book, Being Mortal.
Who knew that a book on how health systems get it wrong at the end of life could become a bestseller? Gawande put forward the radical notion that people should be in control of their lives and remain autonomous as much as possible in assisted living and nursing home care, even if it means risking a fall to stay out of a wheelchair.
And while Gawande’s appointment did not reveal anything else about what the company would actually do, we know two facts: it will be based in Boston, and operate as an “independent entity that is free from profit-making incentives and constraints.”
Clues remain elusive
People look for clues in what Gawande will do in his speeches at conferences and in his statements, because interviews are few to none.
“I’m thrilled to be named CEO of this healthcare initiative,” Gawande said by statement. “I have devoted my public health career to building scalable solutions for better healthcare delivery that are saving lives, reducing suffering, and eliminating wasteful spending both in the U.S. and across the world.”
The healthcare industry looks to the stars for a sign on how this translates into real-world solutions for a CEO who has 1 million-plus employees under his care.
Amazon’s own impact could be bigger
Despite knowing little, a survey by Reaction Data shows 59 percent of hospital executives believe Amazon – not necessarily the new company – will have the biggest disruptor impact, compared to other major companies.
The retail giant, for instance, is reportedly setting up primary care clinics for its employees in the Seattle area, though it has not yet confirmed whether that relates to the deal with Berkshire and JPMorgan or not. Even before the clinics have been established, experts are already saying that Amazon could reshape the primary care landscape in short order.
CVS and Aetna face anti-competitive concerns
As with many blockbuster acquisitions, the CVS-Aetna deal has its opponents. The California insurance commissioner and the American Medical Association, in fact, both urged federal regulators to block the deal in August 2018.
Gawande gets a COO
Word spread just this week that the Amazon, Berkshire and JPMorgan trio hired Jack Stoddard as chief operating officer. Stoddard bring a digital health background, having worked at Comcast when it partnered with Independence Health Group to develop a healthcare technology platform. He was also an executive at Optum and United Health Group.
Future payer focus: customer experience
Mark Bertolini told Fortune that the insurer needs the CVS deal. Asked why, Bertolini explained that it’s because CVS is closer to the consumer, right where insurers want to be.
“The insurance company isn’t going to be about making money anymore,” Bertolini said. “It’s (going to be) about facilitating the financing of affordable and convenient care.”
Bertolini aptly said exactly what healthcare is about moving forward: the customer experience.
That is also the disruption everyone is waiting to see from the Amazon, Berkshire Hathaway, JPMorgan Chase partnership. Targeting the customer is something Amazon knows.
CVS and Aetna have been expected to merge by the end of 2018 and on Wednesday the media outlets reported that, at least according to “people familiar with the matter,” the U.S. Department of Justice could approve that merger within the next few weeks.
Exactly when Amazon, Berkshire and JPMorgan will reveal more details beyond its CEO and COO, however, remains to be seen. But Berkshire CEO Warren Buffett said the startup is hiring people and will continue doing so.
We’re betting that both deals will bring sweeping changes to healthcare organizations.
Date: September 11, 2018
Source: Healthcare Finance